Spitzer Says Greenberg Cheated Charity of $6 Billion Essay Example

Spitzer Says Greenberg Cheated Charity of $6 Billion Essay Example Spitzer Says Greenberg Cheated Charity of $6 Billion Essay Spitzer Says Greenberg Cheated Charity of $6 Billion Essay Dec. 14 (Bloomberg) New York Attorney General Eliot Spitzer said Maurice Hank Greenberg and other former American International Group Inc. executives exploited their authority 35 years ago, costing a charity set up by AIGs founder $6 billion.In a letter alerting the charity today, Spitzer said Greenberg, ousted as AIGs chief executive officer amid an accounting probe by Spitzer earlier this year, shortchanged the Starr Foundation when he was an executor of AIG founder Cornelius Vander Starrs estate in 1969 and 1970. Greenberg and the other former executors called the allegations outrageous and indicative of a pattern of abuse by the attorney general.Spitzer, who said he found incriminating evidence in documents Greenberg tried to keep secret during the accounting investigation, may be stepping up pressure as the 80-year-old seeks to rebuild his legacy as leader of the worlds largest insurer for almost 40 years. New York-based AIG has restated $3.9 billion of earnings and pledged to cooperate with regulators. Greenberg has said the corrections were driven by fear.The case against AIG has been personalized because the company has rolled over and Hank hasnt, said Phillip Phan, a finance professor at Rensselaer Polytechnic Institute in Troy, N.Y., who wrote Taking Back the Boardroom. Hank is a direct challenge to his attempt to clean up the industry.Spitzers letter, accompanied by a 26-page report on his investigation of the matter, said Greenberg and the other executors cheated the foundation by selling Vander Starrs assets at below-market prices to two private companies that they controlled. C.V. Starr ; Co. and Starr International Co., which still exist today, shared offices and executives with AIG, and in fact all the executors of Starrs were C.V. Starr directors.`Public Stink BombWere charitable assets of the foundation, as the residual beneficiary of the estate lost in a series of transactions orchestrated by the very fiduciaries obligated to protect the est ates interests? Spitzer wrote to Starr Foundation President Florence A. Davis, who used to be AIGs top lawyer.Greenberg and the other former executors called the latest allegations Spitzers attempt to justify his decision to pressure AIGs board, under threat of criminal indictment, to remove Greenberg as chairman and CEO. Spitzer, who accused AIG and Greenberg of fraud in a civil suit in May, announced he wouldnt pursue criminal charges against Greenberg last month.The attorney generals case against Hank Greenberg was disgraceful from the start, said billionaire Ken Langone, a co- defendant in Spitzers lawsuit against former New York Stock Exchange Chairman Richard Grasso. It now seems apparent that Mr. Spitzer is trying to shore up his sorry case and his flagging political reputation by lobbing what amounts to a public stink bomb.Court ApprovalGreenberg, Houghton Freeman, John Roberts and Ernest Stempel are the only executors still living today, according to C.V. Starr spokesman Ho ward Opinsky. Today they cited 25-year-old approvals from a former New York attorney general and the New York Surrogates Court inGreenberg, Houghton Freeman, John Roberts and Ernest Stempel are the only executors still living today, according to C.V. Starr spokesman Howard Opinsky. Today they cited 25-year-old approvals from a former New York attorney general and the New York Surrogates Court in defending the asset sales by Starrs estate. The executors had determined that they should get the approvals precisely because of their multiple roles.The conduct and attitude of the attorney general in his pursuit of these allegations reflects a pattern of abuse and bad faith adopted toward Mr. Greenberg from the beginning of the investigation of AIG, they said in more than 35 pages of written response to Spitzers allegations.Spitzer urged the foundation to appoint an independent committee to evaluate remedies, though Greenberg, who now runs C.V. Starr and Starr International as investment c ompanies, is also chairman of the charity.Negative PublicityOpinsky said the Starr Foundation issued a statement today defending the transactions, though calls to Courtney OMalley, a vice president at the foundation, and the firms main number werent returned.While the Starr Foundation respects the authority of the Attorney General to supervise charitable foundations, and to investigate alleged improprieties, the Foundation is concerned that allegations concerning a judicial proceeding closed more than 25 years ago and the negative publicity attendant thereto may adversely affect the value of the assets of the Foundation, without discernable purpose, according to an emailed statement that Opinsky said the foundation provided.Spitzers report contends the foundation, which has $3.5 billion in assets, would have accrued another $6 billion over the past 35 years had it not been underpaid in three separate estate transactions following Starrs death in 1968. To make matters worse, C.V. Sta rr and Starr International sold the same assets to AIG at far higher prices shortly thereafter, Spitzer said.AIG SharesIn one transaction, for example, Spitzer said the executors knew the estates 48 percent stake in American International Underwriters Far East Inc. was worth far more than book value because one of them was the president of Far East.The estate got cash that would be worth $17.6 million today, he said. Instead, it should have received AIG stock that would be worth $1.2 billion today.Spitzer, who oversees nonprofits and charitable foundations, said the foundation may have claim to AIG stock held by Starr International. The firm, which distributed deferred compensation to AIG executives for decades, is in a legal battle with AIG to keep control of more than $19 billion of the companys shares. AIG spokesman Chris Winans declined to comment.Spitzer said Greenberg and his lawyers misrepresented the transactions to the former attorney general and to the court. There is no s tatute of limitations if the foundation chooses to try to recover the money, Spitzer spokesman Marc Violette said, declining to say what action the attorney general might take.The Starr Foundation makes charitable grants in education, medicine and public policy.(Article appeared in bloomberg.com on Dec. 14th, 2005)http://quote.bloomberg.com/apps/news?pid=10000006;sid=asSTBnA7L7gA;refer=home#Bloomberg Article AnalyisThis article, entitled Spitzer Says Greenberg Cheated Charity of $6 Billion (Update4) appeared on bloomberg.com on December 14, 2005.   In this article, it is discussed how New York Attorney General Eliot Spitzer recently issued a letter to the Starr Foundation, a charity set up in conjunction with the American International Group, Inc.s (AIGs) founder Cornelius Vander Starrs estate, stating that Maurice Hank Greenberg and other former American International Group Inc. executives committed wrongful acts thirty-five years ago, resulting in a monetary loss to the charity in the amount of six   billion dollars.   Greenberg was AIGs former chief executive officer, and the executor of the estate, who was ousted from his CEO position amidst an accounting investigation.Namely, Spitzer alleges that these individuals sold shares of AIG stock owned by the charity in three separate transactions for far less than these stock shares were worth.   These shares were sold to C.V. Starr ; Co. and Starr International Co., who still exist today, share executives with AIG, and all of the directors of these companies were executors of Starrs estate.   These shares were sold by these corporations back to AIG at a much higher price shortly thereafter.As agents and fiduciaries of Starrs estate and the foundation, the executives had a duty to act in the best interest of them.   They also had a duty to reveal any conflicts of interest, and not to profit at the expense of the estate and foundation.  Ã‚   Furthermore, they were directors and officers of AIG, who made a profit for C.V. Starr ; Co. and Starr International Co. at the expense of AIG.   This was another conflict of interest at the expense of AIG shareholders.   As AIG insiders, the executors knew the actual value of the shares and chose to sell them at a lesser price to divert value from the charity to these other corporations.   Furthermore, the foundation may now have claim to some of the shares held by Starr International.   These executors are also agents and fiduciaries of Starr International, who may have ultimately harmed Starr Internationals well-being by their wrongful acts.

Chokepoints Definition and Explanation

Chokepoints Definition and Explanation There are approximately 200 straits (narrow bodies of water connecting two larger bodies of water) or canals around the world but only a handful are known as chokepoints. A chokepoint is a strategic strait or canal which could be closed or blocked to stop sea traffic (especially oil). This type of aggression could surely cause an international incident. For centuries, straits such as Gibraltar have been protected by international law as points through which all nations may pass. In 1982 the Law of Sea Conventions further protected the international access for nations to sail through straits and canals and even ensured that these passageways are available as aviation routes for all nations. Gibraltar This strait between the Mediterranean Sea and Atlantic Ocean has the United Kingdoms tiny Gibraltar Colony as well as Spain on the north and Morocco and a small Spanish colony on the south. United States warplanes were forced to fly over the strait (as protected by the 1982 conferences) when attacking Libya in 1986 since France would not allow the U.S. to pass through French airspace. Several times in our planets history, Gibraltar was blocked by geologic activity and water could not flow between the Mediterranean and Atlantic so the Mediterranean dried up. Layers of salt at the bottom of the sea attest to this having occurred. Panama Canal Completed in 1914, the 50-mile long Panama Canal links the Atlantic and Pacific Oceans, reducing the length of the journey between the east and west coasts of the United States by 8000 nautical miles. About 12,000 ships pass through the Central American canal each year. The United States retains control of the 10-mile wide Canal Zone until the year 2000 when the canal is turned over to the Panamanian government. Strait of Magellan Before the Panama Canal was completed, boats traveling between the U.S. coasts were forced to round the tip of South America. Many travelers risked disease and death by attempting to cross the dangerous isthmus in Central America and catch another boat to their destination to keep from sailing the extra 8000 miles. During the California Gold Rush in the mid-19th century there were many regular trips between the east coast and San Francisco. The Strait of Magellan lies just north of the southern tip of South America and is surrounded by Chile and Argentina. Strait of Malacca Located in the Indian Ocean, this strait is a shortcut for oil tankers traveling between the Middle East and the oil-dependent nations of the Pacific Rim (especially Japan). Tankers pass through this strait bordered by Indonesia and Malaysia. Bosporus and Dardanelles Bottlenecks between the Black Sea (Ukrainian ports) and the Mediterranean Sea, these chokepoints are surrounded by Turkey. The Turkish city of Istanbul is adjacent to the Bosporus in the northeast and the southeast strait is the Dardanelles. Suez Canal The 103 mile long Suez Canal is located entirely within Egypt and it is the only sea route between the Red Sea and the Mediterranean Sea. With Middle East tension, the Suez Canal is a prime target for many nations. The canal was completed in 1869 by French diplomat Ferdinand de Lesseps. The British took control of the canal and Egypt from 1882 until 1922. Egypt nationalized the canal in 1956. During the Six-Day War in 1967, Israel seized control of the Sinai Desert directly east of the canal but relinquished control in exchange for peace. Strait of Hormuz This chokepoint became a household term during the Persian Gulf War in 1991. The Strait of Hormuz is another critical point in the lifeline flow of oil from the Persian Gulf area. This strait is closely monitored by the U.S. military and its allies. The strait connects the Persian Gulf and the Arabian Sea (part of the Indian Ocean) and is surrounded by Iran, Oman, and the United Arab Emirates. Bab el Mandeb Located between the Red Sea and Indian Ocean, the Bab el Mandeb is a bottleneck for sea traffic between the Mediterranean Sea and Indian Ocean. It is surrounded by Yemen, Djibouti, and Eritrea.